Bureaucracy gets in the way to stop increase in regulatory duty

FBR chairman apparently sat on summary to get the proposal removed

Shahbaz Rana December 24, 2017
The FBR’s original proposal contained increasing regulatory duty on meat, cans, woven fabrics, PVC resin, knitted caps, float glasses, yarn, iron, steel items, copper, electric conductors, etc. PHOTO: FILE

ISLAMABAD: Powerful bureaucrats have managed to maneuver a cabinet panel meeting to stop a planned increase in regulatory duty despite Prime Minister Shahid Khaqan Abbasi having cleared the proposal as finance minister.

During a meeting of the Economic Coordination of the Cabinet held on Friday, Federal Board of Revenue  (FBR) Chairman Tariq Pasha backed off from the proposal to increase regulatory duty on six items and levy a fresh one on 11 items despite having signed the summary. The duty increase was proposed to give protection to some local industries that are facing stiff competition from the influx of cheap imports.

IMF questions levy of duties, weak tax regime

By backing off from the proposal, Pasha also took a different line than what had been internally agreed in the FBR at the level of Special Assistant to Prime Minister on Revenue, said the sources.

Pasha upsets the plan that had the support of Prime Minister Abbasi, Commerce Minister Pervaiz Malik and Special Assistant to Prime Minister on Revenue Haroon Akhar Khan, said sources who attended the ECC meeting.

“Finance minister (Shahid Khaqan Abbasi) has seen the summary and approved its submission to the ECC of the Cabinet for its consideration,” according to a summary signed by Pasha.

The summary contained four annexures. Two were related to reduction and abolishment of duty and the remaining two were about increasing or levying fresh duty. The ECC, chaired by PM Abbasi, approved the relief only for the importers.

As the summary was presented for the ECC approval, Secretary Commerce Younus Dagha objected that the FBR did not take the commerce ministry on board, said the sources. But Member Customs FBR Zahid Khokar defended his department’s summary in the ECC.

On the contrary, Pasha immediately gave up and claimed in the meeting that he skipped this issue and sought deferment of the summary. The PM had no option but to defer the proposal. The growing influence of the bureaucracy suggests that the political leadership is losing grip over power.

Sources said that Pasha was never in favour of the summary to increase regulatory duty. He blocked the summary at his table and transmitted it to the PM’s Office only after he was pushed to do so, said the sources.

Wavering decision-makers: Government dithers at economy’s expense… again

The sources said that Dagha was of the view that only a few tariff lines such as polyester yarn and aluminum cans were discussed with his ministry. The sources said that Dagha informed that most of the items that have been presented for increase or levy of the fresh duties were not discussed with the commerce ministry.

It was not for the first time that FBR has been accused of ignoring the commerce ministry. Earlier in October, the FBR deviated significantly from the list of items the commerce ministry shared with it for the levy of regulatory duty on non-essential items to curb imports.

In first week of October, the ECC had approved levying regulatory duty ranging from 10% to 30% on scores of non-essential items. After the levy, the FBR had received number of representations from both the importers and the local manufacturers.

In order to accommodate both extremes, the FBR had proposed to reduce or abolish duties on 14 items and increase or levy fresh duty on 16 products. The FBR had received 53 representations. As many as 41 representatives sought reduction and removal of duty. A dozen local manufacturers had sought protection to protect the local industries against the influx of cheap imports.

The FBR’s original proposal contained increasing regulatory duty on meat, cans, woven fabrics, PVC resin, knitted caps, float glasses, yarn, iron, steel items, copper and electric conductors etc.

An inter-ministerial committee, comprising representatives from the FBR, Ministry of Commerce and Ministry of Finance, consulted with the Textile Division, the Engineering Development Board and National Tariff Commission for finalising four sets of recommendations.

The committee had accommodated genuine concerns of both the importers and the local manufacturers. A summary carrying the list of items was presented to the prime minister who had personally given approval of all the four categories.

The proposals that were presented to the ECC had been vetted by the inter-ministerial committee. But the commerce ministry was of the view that the FBR changed the list afterwards, said the sources.

Published in The Express Tribune, December 24th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.


Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ


Most Read